1. Chapter 257 of the Acts of 2008
Clubhouse Provider Information & Dialogue Session
August 18, 2010

2. Agenda Chapter 257 Implementation Infrastructure
Service Classification System
Setting Rational Rates
Contract Reform
Overview of Clubhouse Service Class
Overview of Clubhouse Service Model under New Procurement
Timeline for Procurement and Rate Setting Implementation
Preliminary Analysis of Current Program Costs
Discussion: Understanding Cost Drivers and Variations Among DMH Clubhouse Programs

3. Chapter 257 of the Acts of 2008 Regulates Pricing for the POS System
Chapter 257 places authority for determination of Purchase of Service reimbursement rates with the Division of Health Care Finance and Policy.
Chapter 257 requires that DHCFP consider the following criteria when setting and reviewing human service reimbursement rates:
Reasonable costs incurred by efficiently and economically operated providers
Reasonable costs to providers of any existing or new governmental mandate
Changes in costs associated with the delivery of services (e.g. inflation)
Substantial geographical differences in the costs of service delivery
Some rates within the POS system do not reflect consideration of these factors.
Additional funding was not appropriated to finance any potential cost increases associated with the law.
The statute specifies a four year implementation timeframe.
FY10
FY11
FY12
FY13
Statutory Requirement: Percent of POS System with Regulated Rates
10%
30%
Spending Base Associated with Statutory Percentage (based on current projection of $2.1B POS Baseline to be implemented)
~ $215M
~ $645M

4. Chapter 257 Requires Successful Achievement of Three Strategies
1. Create Service Classes
2. Develop Reimbursement Methodology & Rates
3. Reform Contracting
Develop Service Class structure to group similar services & programs
Build out process & technology to manage codes & classes
Align activity codes to Service Classes
FY09
Develop Implementation Plan
Develop Service Classes
Establish new cross-Secretariat organizational and governance structure
Maximize
Cumulative Statutory Requirement
Use of Master Agreements
Contracts w/ performance features
Contracts shared across departments
Service Value
FY % of System $215M
Enabling
FY % of System $860M
Rate analysis and establishment
Contract consolidation across agencies
Improved reporting
FY % of System $1.50B
Minimize
FY13 100% of System $2.15B
Number of different POS contracts
Cost reimbursement contracts

5. The HCFP-led Cost Analysis and Rate Setting Effort has Several Objectives and Challenges
Objectives and Benefits
Development of uniform analysis for standard pricing of common services
Rate setting under Chapter 257 will enable:
Predictable, reimbursement models that reduce unexplainable variation in rates among comparable, economically operated providers
Incorporation of inflation adjusted prospective pricing methodologies
Standard and regulated approach to assessing the impact of new service requirements into reimbursement rates
Transition from “cost reimbursement” to “unit rate”
Challenges
(Extremely) fast paced timeline
Constrained resources for implementation
Cross system collaboration and communication
Data availability and integrity (complete/correct)
Coordination of procurement with rate development activities
Pricing Analysis, Rate Development, Approval, and Hearing Process
Data Sources Identified or Developed
Provider Consultation
Cost Analysis & Rate Option Development
Provider Consultation
Review/ Approval: Departments, Secretariat, and Admin & Finance
Public Comment and Hearing
Possible Revision / Promulgation

6. In Many Cases, Contract Reform is Necessary to Implement Chapter 257
Today
Vision for FY13
Purchasing Department
Providers
Providers
Secretariat or Department Master
Agreements
By Service Class
DHCFP rate schedules
Panel of qualified providers
Departments purchase via rate agreements
Dept
Dept
Dept
Dept
Dept
Dept
Dept
Thousands of individually negotiated contracts
Multiple contracts within and across departments with the same providers.
Services with core similarities purchased individually by agencies and regions
Low capacity for cross-agency coordination, performance assessment
Reduced contract complexity and redundancy
Greater amendment flexibility
Improved capacity for rate management
Streamlined, centrally-managed procurement cycles

7. Benefits to EOHHS Departments
Master Agreements Simplify Management of the POS System for Providers and Departments
Benefits to Providers
Single bidding cycle for similar services
Bid once – engage many times under a single bid
Standard reporting formats
Rate transparency
Potential to engage with new purchasing Departments
Benefits to EOHHS Departments
Reduced procurement burden
Potential to expand pool of providers
Enable statewide coordination
Eliminate multiple procurements for the same service

8. Agenda Chapter 257 Implementation Infrastructure
Service Classification System
Setting Rational Rates
Contract Reform
Overview of Clubhouse Service Class
Overview of Clubhouse Service Model under New Procurement
Timeline for Procurement and Rate Setting Implementation
Preliminary Analysis of Current Program Costs
Discussion: Understanding Cost Drivers and Variations Among DMH Clubhouse Programs

9. Clubhouse Services
Service Class Definition: Programs that provide individuals with mental or behavioral health issues support services which include: employment, educational services and social services to help individuals live a productive and stable life in the community.
DMH
Activity Code
Program Name
Projected FY11 Spending
3034
Clubhouse Services
$ ,835,106
DMH anticipates that total spending on Clubhouses will remain the same under the new procurement.

10. Overview of Clubhouse Service Model Under New Procurement
HCFP will develop a rationale rate methodology that will be applied to all Clubhouse programs. Individual Clubhouse providers may receive reimbursement at levels above or below their current annual maximum obligation amounts.
Future Key Programmatic Elements:
Open enrollment
Unlimited time membership
Services are defined and member level utilization is tracked
ICCD certification not required but won’t preclude contractors from attaining certification status
Clubhouses become a bridging service
Full array of employment services offered but greater emphasis on independent employment
Service specific Individualized Action Plans (IAPs) developed and implemented according to DMH regulations
Emphasis on building natural community supports to achieve goal attainment
Services meet the needs of a diverse membership 
Effectiveness of service measured at an individual and systems level
Decisions Under Consideration:
Number of Clubhouses to be purchased going forward
Potential utilization of a Master Agreement structure

11. Planned Procurement Approach and Timeline for Implementation
DMH will be re-procuring all contracts under their 3034 Clubhouse Services in mid-November for contracts effective on July 1, 2011
DHCFP regulated rates will be adopted in late winter 2011, but will not be effective until contracts are executed in July 2011

12. Analysis of Current Program Cost Drivers to Date
The calculated costs for Clubhouse programs range from ~$1,000 to over $7,000 per member per year, using current dynamic capacity estimates (number of unduplicated members a Clubhouse anticipated serving annually).
FY2010 Contract Budget data was used in the analysis, as well as the static and dynamic capacity information provided by DMH.
DHCFP has issued a survey to current Clubhouse organizations to obtain a better understanding of client utilization.

13. Most of the spending (36%) in each program is on non-specialized direct care staffing

14. Agenda Chapter 257 Implementation Infrastructure
Service Classification System
Setting Rational Rates
Contract Reform
Overview of Clubhouse Service Class
Overview of Clubhouse Service Model under New Procurement
Timeline for Procurement and Rate Setting Implementation
Preliminary Analysis of Current Program Costs
Discussion: Understanding Cost Drivers and Variations Among DMH Clubhouse Programs

15. Understanding DMH Clubhouse Services
The following questions are intended to guide a discussion on the way these services are delivered:
What kind of unit rate would work best for Clubhouses (client day, enrollment day)?
What are the major costs associated with the different components of Clubhouse programs? Do some Clubhouses emphasize certain components over others?
How does member participation in Clubhouses vary in terms of frequency and duration? Are there any differences between members who are DMH-referred and those who are not? Do you keep track of member participation?
What staff positions, professional qualifications, and level of staff intensity are necessary to achieve the intended outcomes in each program? How do Clubhouses determine an appropriate number of staff for the program?
Does geographical region or setting affect program costs (transportation, occupancy, etc)?